Rent-Hungry Los Angeles Landlords Hide Tenants with Pepsi Signs

Wednesday, February 4, 2009
Michael Janofsky

Andy Safir says he paid a premium for
a view of the Santa Monica Mountains and Los Angeles skyline
when he leased space for his economic consulting firm.

He was surprised one morning to find the office in shadows
even though the sun was shining. While he traveled abroad, the
side of the building had been draped with a giant Statue of
Liberty in protest against a city sign moratorium on just that
kind of display.

“I was horrified,” said Safir, president of Recon
Research Corp. “What they effectively did was sell my view
twice -- once to me, then to the sign company.”

So-called supergraphics, huge posters made of vinyl and
mesh, can bring in $20,000 a month or more, said Paul Fisher, a
lawyer in Newport Beach, California, who represents advertising
firms and landlords in disputes with the city of Los Angeles.

That’s drawing landlords hungry for revenue, as vacancy
rates rise for Los Angeles office buildings. Ads for Tropicana
orange juice, Pepsi Cola, Club Med and other products cover as
much as 10 stories of building faces, including windows.

Tenants complain that the signs block their natural light,
while other opponents say the banners clutter an urban landscape
already filled with commercial messages. The city opposes some
signs for safety reasons, and the fire department ordered
removal of about 20, City Councilman Jack Weiss said at a news
conference last week.

“Big signs mean big money,” said Safir, who initiated a
lawsuit against his building over the sign. A federal court
ruling in August that the signs are legal is being appealed.
Outdoor advertising companies and property owners have filed
about a dozen more lawsuits against the city in the meantime,
challenging a Dec. 26 moratorium against all new signs to give
local officials 90 days to rewrite regulations.

Loss of Revenue

The temporary ban is costing property owners millions of
dollars, said Gary Mobley, a Newport Beach lawyer who represents
one of the plaintiffs in a property owners’ lawsuit challenging
the moratorium.

Supergraphics began appearing around Los Angeles about nine
years ago when new printing techniques made them cheaper than
using paint, Fisher said. The latest wave began last summer,
after Judge Audrey Collins of the U.S. District Court for the
Central District of California ruled that a 2002 ban on all
signs was unconstitutional because city officials made
exceptions to the restrictions.

More signs went up through the end of the year, as the
deteriorating economy hurt office occupancy. Vacancies increased
to 12.2 percent in the fourth quarter from 9.7 percent a year
earlier, according to a report by real-estate broker Grubb &
Ellis Co. in Santa Ana.

‘Unfair’ Attacks

Building owners “are being unfairly attacked for creating
a revenue stream,” said Michael McNeilly, president of Sky Tag
Inc. in Beverly Hills, the ad agency responsible for the Lady
Liberty on Safir’s building at 6380 Wilshire Boulevard.

McNeilly said the sign was hung at no charge, to make the
point that liberty is being subverted by the city’s moratorium
while demonstrating that the building is available for paid ads.
Four property managers whose buildings carry supergraphics
didn’t return telephone messages seeking comment.

Anti-sign activists reject the argument that landlords
should be cut any slack because of financial problems. Having
vacancies doesn’t mean they’re permitted to install a machine
shop or a house of prostitution in an office building, said
Gerald Silver, president of a homeowners association in the Los
Angeles suburb of Encino.

“You have to draw a line somewhere,” Silver said. “The
line is drawn with a city ordinance that says it’s not lawful to
have these signs.”

Movement on Blog

One sign-covered tenant is taking his protest campaign to a
blog called 10801 Take Sign Down Now. David Allan, a
chiropractor whose office at 10801 National Boulevard is covered
by a Tropicana supergraphic, encourages readers to “voice your
opinion and stand up against this insult and injustice.”

Supergraphics are central to Purchase, New York-based
PepsiCo Inc.’s new campaign called Refresh Everything, said Larry Jabonsky, a company spokesman. Tropicana is a PepsiCo
brand.

“Big, spectacular outdoor advertising is an extremely
important element” of Tropicana’s campaign, Bob Porcaro, group
account director for Optimum Media Direct, a unit of New York-
based Omnicom Media Group, wrote in an e-mail. He said the best
way to showcase Tropicana packaging is “larger-than-life
outdoor units that are going to be seen by millions of
consumers.”

Having a supergraphic plastered across an edifice may be
counterproductive for landlords, Safir said.

“I can’t imagine why a building would put up a sign that
ticks off the tenants,” he said. “The last thing they want is
for a tenant to move out.”

The Statue of Liberty covering his office was replaced Jan.
22 with a supergraphic depicting a camera viewfinder -- with
holes cut out for the building windows.

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